How to automate your invoice processing in 3 steps

Paying vendor invoices on time is key to maintaining healthy relationships with agencies, freelancers, and other partners that help your business grow. However, many businesses struggle to keep up with these critical vendor management tasks. According to a survey by QuickBooks, mid-sized businesses were owed an average of over $300,000 in late payments. 

Paying invoices on time is a big enough challenge when you only have a few vendors to manage. The task becomes even more daunting as your business grows, especially if you’re trying to manage a high volume of vendors manually. This is why a growing number of finance teams are relying on automation to ensure each invoice gets paid on time. 

Automated invoice processing can save you time and money, but there are a few things you’ll need to know before you get started. Here’s an overview of how automation streamlines your invoice processing—and how Ramp can make it even easier.  

What is invoice processing?

Invoice processing is a term that describes tracking, management, and payment of vendor invoices. Typically this is handled by a company’s accounts payable (AP) department, which is trained to process dozens of invoice types. However, the most common types of invoices are those associated with a purchase order (PO) and those that are not associated with a purchase. 

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How invoice processing works

Although digital solutions are now widespread, we’re still emerging from an era of paper invoices and snail mail. Many habits are inherited from a time before invoice processing automation. And some businesses still prefer to do things on paper instead of electronically.

3 steps of invoice processing

Here is the step-by-step of how invoices are typically processed, along with the challenges they bring. 

Step 1: Receive the invoice or bill

Upon receiving an invoice, the accounts payable department needs to confirm that the business received the products or services on the bill. The AP department then needs to match the amount billed to the amount on the original purchase order (PO). If they identify any discrepancies, AP typically tries to resolve them before forwarding the invoice for payment. 

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Step 2: Approve invoice for payment 

Once AP has confirmed the details on the invoice, the document is routed to the teams responsible for disbursing payment. 

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Step 3: Process payment

After an invoice has been routed for payment, the accounting department processes the payment to the vendor. These payments are typically submitted by check or bank transfer; payments to vendors or contractors are typically due either 30 or 60 days after the invoice was received.

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Although this is a fairly straightforward process, there is a lot of room for human error. Several people review and approve each invoice, which is tedious and time-consuming. Even the most experienced AP professionals tend to miss an email or approve an invoice that doesn’t match the original purchase order. This can lead to problems with spend tracking, expense management, employee reimbursement, and more.

However, most of these headaches can be avoided by introducing invoice processing automation into your accounts payable workflows.

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How to automate invoice processing

Automated invoice processing doesn’t just help you make payments on time. It gives you more control over your business by saving you time and helping you manage cash flow more efficiently. 

Ramp has several features across its platform that streamline invoice processing from initial receipt through final payment and record keeping. 

Here’s how you can automate your invoice processing with Ramp. 

Step 1: Control spending proactively

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With Ramp, you can predetermine who should receive which invoices so that bills are automatically routed to the right person. Ramp also enables administrators to set spending limits for approved requests and to pre-approve vendors.

Step 2: Digitize and standardize invoices automatically

With Ramp’s AI-powered invoice processing and digital matching, expenses are standardized in seconds. Ramp automatically registers uploaded invoices and keeps track of corporate card payments in real time.

Step 3: Approve spending with the click of a button 

Ramp automatically notifies managers about requests that need their attention. You can also leverage our Slack integration to handle everything from initial requests to final invoice approvals.

Step 4: Pay bills your way 

Whether you’re paying bills and invoices through ACH, credit card, or check, Ramp gives you the flexibility to pay in the way that makes sense for that vendor relationship. It takes seconds to send a payment and all of it gets tracked in the same system—no matter which payment type you choose. 

Step 5: Automate bookkeeping with accounting integrations 

Ramp integrates with powerful small business accounting software like Xero and QuickBooks so that all of your information is ready for tax time and beyond. 

Ramp: The only tool you need to streamline invoice processing

It’s tough to keep track of vendor management best practices. Even seasoned business owners can have a hard time implementing best practices for invoice processing. It can get overwhelming quickly, especially if your business is growing. 

Having a partner like Ramp saves you time by providing forward-thinking automation at every step of the invoice processing workflow.

Ramp is more than a corporate card. It’s a centralized platform that gives you visibility and control over your business spend, right now and as it grows.